Bill Bonner

The latest from the G20 meeting in Toronto. As you recall, the meeting was billed as a showdown between the Germans and the Americans…that is, between the deficit cutters and the big spenders…

That is, between the people without a hope and the people without a clue.

TORONTO (AP) – World leaders must work together to make sure the global recovery stays on track, Treasury Secretary Timothy Geithner said Saturday.

Geithner made his remarks as President Barack Obama has warned his counterparts from the Group of 20 nations to not reel in measures to stimulate their economies too quickly. The United States fears doing so could endanger the global recovery.

Asked if the global economy could slip back into another “double dip” recession, Geithner said the answer to that question hinges on decisions made by world leaders. “It is within the capacity of the people who are going to be in those rooms together in the next few days to avoid that outcome,” he said.

“If the world economy is to expand at its potential, if growth is going to be sustainable in the future, then we need to act together to strengthen the recovery and finish the job of repairing the damage of the crisis.”

As near as we can tell, the recovery has been on the wrong road since it started its motor. And the folks in Toronto couldn’t put it “back on track,” even if they knew what they were doing. All they can do is get out of the way.

The system has too much debt. It needs to get rid of some of that debt – by write offs, defaults, and pay downs. Things that must happen, must happen sooner or later. Better sooner than later.

But what IS happening now?

World trade is breaking down – the Baltic Dry index, a measure of world trade, recently fell 17 days in a row.

Consumer spending is breaking down – the “consumer discretionary” sector has turned ominously negative.

Stocks are breaking down – the Dow fell 9 points on Friday…145 points the day before….

Employment is breaking down – you know the story.

Housing is breaking down – not since 1963 have people bought so few new houses.

Does this sound like a recovery? Of course not.

What it sounds like is a defeat. A failure for the recovery team.

But don’t worry, boys, sometimes failure is the best you can hope for. And come to think of it…defeat is not so bad. Think how much better off the Chinese would have been if Mao’s long march had ended in the total collapse of his army. And suppose George W. Bush hadn’t been such a total failure? People might not have elected Barack Obama. And what if the invention of the television had never caught on? Americans might still have some dignity and brains….

Not only do collapse and failure help prevent bigger mistakes, they also correct mistakes after you’ve made them. Running up debt equal to 362% of global GDP was probably not the smartest thing the human race ever did. Trying to ‘recover’ the economy and reproduce the system that produced those debts is even dumber.

Instead, let’s have a good old fashioned correction…a collapse…a failure of the Geithner, Bernanke, Obama team. We’re going to have it anyways. Bring it on. Get it over with!

Bill Bonner
for The Daily Reckoning

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success in numerous industries. His unique writing style, philanthropic undertakings and preservationist activities have been recognized by some of America's most respected authorities. With his friend and colleague Addison Wiggin, he co-founded The Daily Reckoning in 1999, and together they co-wrote the New York Times best-selling books Financial Reckoning Day and Empire of Debt. His other works include Mobs, Messiahs and Markets (with Lila Rajiva), Dice Have No Memory, and most recently, Hormegeddon: How Too Much of a Good Thing Leads to Disaster. His most recent project is The Bill Bonner Letter.

  • jason

    The silly newspaper today reported that “stocks were rising because consumer confidence was up” but by closing bell the Dow was down 5 points. The story is now “Stocks slip when consumer saving outpaces consumer spending.” How could this have had more weight than the increase in confidence?

  • http://www.tentonbooks.com Geoff

    “Running up debt equal to 362% of global GDP was probably not the smartest thing the human race ever did. Trying to ‘recover’ the economy and reproduce the system that produced those debts is even dumber.”

    That’s the quote of the day! You rule, Bill.

  • Fred

    Now see what a good job you can do when you stop bellyaching about leeches, zombies, etc. That silly stuff doesn’t help anybody, but I can use quotes like you gave us today.

  • Melvin Woody

    Why are you sending me all of these blogs? I didn’t ask for any. When the Monitor stopped publishing daily, I signed up for on-line news delivery, not for all this uninvited opinion. Is there some way to put a stop to it all. I signed up for news. You now send me daily emails about topics of interest – but the headlines and little squibs don’t distinguish between real news and this sort of empty opinion. I would welcome the sort of staff written editorial content that used to appear in the daily Monitor, but not this sort of hot air. Can’t I subscribe to news along. Or, at the very least, can’t you indicate which items are news and which are just blogs? Or is this even the proper spot to complain? I seem to have been disconnected from the Monitor somehow, whereas I want them to take corrective action.

Recent Articles

5 Min. Forecast
How the Swiss Could Set Off a Financial Avalanche

Dave Gonigam

There have been quite a few disappointing numbers in the global economy recently. But as these numbers are just economic "snowflakes" building toward a financial avalanche. All you need is one to push it over the edge. And as Dave Gonigam explains, the deciding snowflake may come from Switzerland. Read on...


Addison Wiggin
One World, One Bank, One Currency

Addison Wiggin

After the 2008 financial crisis, little could be heard over the deafening cries of "mission accomplished." And while the Fed's massive QE program seemed to work, the question remains: for how long? Addison Wiggin explains why the next round of QE will fail miserably, paving the way for the IMF to step in with something called "special drawing rights." Read on...


Addison Wiggin
Profit from Global Warming, Even if You Don’t Believe In It

Addison Wiggin

Global warming is one of the most debated subjects of the last few years. But regardless of whether you're a "true believer" or a merely an unconvinced skeptic, there are significant ways to make serious money from this controversial topic. Today, Addison Wiggin brings you three of them. Read on...


Don’t Drink the Tap Water (It’s Not What You Think)

Chris Campbell

Under the auspices of benefiting public health, the government has been administering medication to you and your family for generations. But is it really necessary? Or worse... Could it actually be harmful? Chris Campbell takes a closer look at this, and other personal health decisions the feds don't trust you to make...


One Metal to Watch in the Current Commodity Crash

Greg Guenthner

Commodities have been in freefall lately. Everything from corn to soy beans to precious metals is headed lower right now. But is this just a brief downturn, or is this the beginning of a long-term trend? Greg Guenthner explains, with a closer look at one specific precious metal that could snap back violently before heading lower. Read on...


Extra!
What to Hold When the U.S. Economic Blimp Deflates

Jim Mosquera

The inflation vs. deflation debate is a heated one. Heck, it almost brought Peter Schiff and Harry Dent to blows. But at the core of this debate is a common misunderstanding of the nature of both inflation and deflation. Today, Jim Mosquera seeks to explain each... and which one the U.S. is more likely to experience. Read on...